Ch. 2: Business Ethics

Question 1

Ethics

Answer 1

Study of what is right or good for human beings

Question 2

Business ethics

Answer 2

Study of what is right and good in a business setting; includes the moral issues that arise from business practices, institutions, and decision making.

Question 3

Ethical fundamentalism

Answer 3

Individuals look to a central authority or set of rules to guide them in ethical decision making.

Question 4

Ethical Relativism

Answer 4

Asserts that actions must be judged by what individuals subjectively feel is right or wrong for themselves.

Question 5

Situational ethics

Answer 5

One must judge a person’s actions by first putting one’s self in the actor’s situation; to understand what motivated the other to choose a particular course of action.

Question 6

Utilitarianism

Answer 6

Moral actions are those that produce the greatest net pleasure compared with net pain.

Jeremy Bentham proclaimed, a good or moral act is one that results in “the greatest happiness for the greatest number.”

Question 7

Act utilitarianism

Answer 7

Assesses each separate act according to whether it maximize his pleasure over pain.

For example, if telling a lie in a particular situation produces more overall pleasure than plain, then an act utilitarian would support lying as the moral thing to do.

Question 8

Rule utilitarianism

Answer 8

Supports rules that on balance produce the greatest pleasure for society.

Question 9

Cost-Benefit Analysis

Answer 9

Quantifies the benefits and costs of alternatives.

Seeks the greatest economic efficiency according to the underlying notion that, given two potential acts, the act achieving the greatest output at the cost promotes the greatest marginal happiness over the less-efficient act, other things being equal.

Question 10

Deontology

Answer 10

Holds that actions must be judged by their motives and means as well as their results.

-address the practical problems of utilitarianism by holding that certain underlying principles are right or wrong regardless of any pleasure or pain calculations.

Question 11

Social ethics theories

Answer 11

Focus on a person’s obligations to other members in society and on the individual’s rights and obligations within society.

Question 12

Social egalitarians

Answer 12

Believe that society should provide all its members with equal amounts of goods and services regardless of their relative contributions.

Question 13

Distributive justice

Answer 13

Stress equality of opportunity rather than results.

Question 14

Libertarians

Answer 14

Stress market outcomes as the basis for distributing society’s rewards.

• Libertarians oppose social interference in the lives of those who do not violate the rules of the marketplace.
• What is unjust to libertarians is any attempt by society to take wealth earned by citizens and distribute it to those who did not earn it.

Question 15

Intuitionism

Answer 15

A Rational person possesses inherent power to assess the correctness of actions.

Question 16

Good person philosophy

Answer 16

Individuals should seek out and emulate good role models.

Question 17

Kohlberg’s Stage of Moral Development:

Preconventional ( Childhood)

Answer 17

A child’s conduct is a reaction to the fear of punishment and, later, to the pleasure of reward. Although people who operate at this level may behave in a moral manner, they do so without understanding why their behavior is moral. The rules are imposed upon them.

Question 18

Kohlberg’s Stage of Moral Development:

Conventional (Adolescent)

Answer 18

People conform their behavior to meet the expectations of groups, such as family, peers, and eventually society. The motivation for conformity is loyalty, affection, and trust. Most adults operate at this level.

Question 19

Kohlberg’s Stage of Moral Development:

Postconventional (Adult)

Answer 19

According to Kohlberg, some
reach the third level, at which they accept and conform to moral principles because they understand why the principles are right and binding. At this level, moral
principles are voluntarily internalized, not externally imposed. Moreover, individuals at this stage develop their own universal ethical principles and may even question the laws and values that society and others have adopted.

Question 20

Corporations as moral agents

Answer 20

Because a corporation is a statutorily created entity, not a person, it is not clear whether it should be held morally responsible.

Question 21

Regulation of business

Answer 21

Government regulation has been necessary because all the conditions for perfect competition have not been satisfied and free competition cannot by itself achieve other societal objectives.

Question 22

Corporate governance

Answer 22

Vast amounts of wealth and power has become concentrated in a small number of corporations, which in turn are controlled by a small group of corporate officers, and it is argued that they therefore have a responsibility to undertake projects to benefit society.

Question 23

Arguments Against Social Responsibility:

Profitability

Answer 23

Because corporations are artificial entities established for profit making activities, they’re only social obligation should be to return as much money as possible to shareholders.

Question 24

Arguments Against Social Responsibility:

Unfairness

Answer 24

Whenever corporations engage in social activities, such as supporting the arts or education, they divert funds rightfully belonging to shareholders and/or employees to unrelated third parties.

Question 25

Arguments Against Social Responsibility:

Accountability

Answer 25

A corporation is subject to less public accountability than public bodies are.

Without clear guidelines and accountability, companies pursuing their private visions of socially responsible behavior might well distort the entire process of governance.

Question 26

Arguments Against Social Responsibility:

Expertise

Answer 26

Although a corporation may have a high level of expertise in selling its goods and services, there is absolutely no guarantee that any promotion of social activities will be carried on with the same degree of competence.

Question 27

Arguments in Favor of Social Responsibility:

The Social Contract

Answer 27

Because society allows for the creation of corporations and gives them special rights, including a grant of limited liability, corporations owe a responsibility to society.

Question 28

Arguments in Favor of Social Responsibility:

Less Government Regulation

Answer 28

By taking a more proactive role in addressing society’s problems, corporations create a climate of trust and respect that has the effect of reducing government regulation.

Question 29

Arguments in Favor of Social Responsibility:

Long-Run Profits

Answer 29

Corporate involvement in social causes creates goodwill, which simply makes a good business sense.

Question 30

Stakeholder model

Answer 30

Corporations have a fiduciary duty to all of their stakeholders, not just their
stockholders, but also employees, customers, suppliers, and managers, as well as the local communities in which it operates.